Pac. Century Dev. & Realty, Inc. v. Wheatland Farms, LLC

Thomas D. Horne, Judge

John R. Walk, Esquire
Chandra D. Lantz, Esquire
HIRSCHLER FLEISCHER, P.C.
Federal Reserve Building
701 East Byrd Street
P.O. Box 500
Richmond, Virginia 23219 Steven M. Sayers, Esquire
Thomas J. Cawley, Esquire
Kimberly L. Nelson, Esquire
Hunton & Williams, LLP
1751 Pinnacle Drive, Suite 1700
McLean, Virginia 22102 Robert J. Stoney, Esquire
John A. C. Keith, Esquire
Blankingship & Keith, P.C.
4020 University Drive, Suite 300
Fairfax, Virginia 22030 Dear Counsel:

This case came before the Court on the Plaintiff's Motion to Compel Discovery and the Defendants' Opposition thereto. The singular issue central to a resolution of the instant discovery dispute is the objection raised by the Defendants respecting the failure of the Plaintiff to file a fictitious name certificate with the Clerk of this Court. By such failure, Defendants argue, that while the Plaintiff is entitled to commence the instant action, it is not permitted to further pursue the matter, including commencement of discovery, until it has brought itself into statutory compliance. By doing so, it is then properly before the Court and the case may proceed. The genesis of the action is an alleged breach of contract. Defendants, among other things, suggest that the instant Plaintiff is not a party to the contract. It is asserted that the Plaintiff's cause of action is based on conduct in violation of the Virginia fictitious name statute. Va. Code Ann. § 59.1-69. That statute provides, in pertinent part, No...corporation shall conduct or transact business in this Commonwealth under any assumed or fictitious name unless such...corporation shall sign and acknowledge a certificate setting forth the name under which such business is to be conducted or transacted, and the names of each person, partnership, limited liability company or corporation owning the same, with their respective post-office and residence addresses (and, ...(ii) when the corporation is a foreign corporation, the date of the certificate of authority to transact business in this Commonwealth issued to it by the State Corporation Commission), and file same in the office of the clerk of the court in which deeds are recorded in the county or city wherein the business is to be conducted. Va. Code Ann. § 59.1-69(A). However, the failure of a corporation to comply with the provisions of Va. Code Ann. § 59.1-76, "...shall not prevent a recovery by...such corporation, in any of the courts of this Commonwealth on any cause of action...but no action shall be maintained in any of the courts in this Commonwealth by such...corporation...until the certificate...has been filed." While a foreign corporation, prior to the filing of the fictitious name certificate, may commence an action, it is limited in its ability to pursue such a cause until it has brought itself into compliance. Phlegar v. Virginia Foods, Inc., 188 Va. 747 (1949); Video Engineering Co. v. Foto-Video Electronics, Inc., 207 Va. 1027 (decided under Va. Code Ann. §§ 13.1-119, 59-176). Defendants properly apply this rule to the pursuit of discovery.

Pacific Century Development and Realty, Inc., the named Plaintiff, is both a Hawaii corporation and a Virginia corporation, incorporated under the Virginia Stock Corporation Act (Va. Code Ann. § 13.1-601 et seq.). The registered office and registered agent of the Virginia Corporation is counsel for Defendant Wheatland Farms, LLC. The State Corporation Commission (SCC) issued a certificate of incorporation for this domestic corporation on April 26, 2005, a date subsequent to the commencement of litigation against the Defendants arising out of the execution of the contract. Pacific Century, Inc., a Hawaii corporation, the named purchaser in the contract documents, was the identified Plaintiff in the earliest iteration of this lawsuit. Pacific Century, Inc. filed a Memorandum of Lis Pendens with this Court on April 12, 2005. As the earlier litigation progressed, the Court rejected a request by the instant Plaintiff to correct a misnomer in that suit over the objection of Pacific Century, Inc., a Hawaii corporation, to substitute Pacific Century Development and Realty, Inc. in that earlier case. Upon the motion of Pacific Century, Inc., the matter was dismissed as to it. Pacific Century Development and Realty, Inc. asserts that the use of the name Pacific Century, Inc. in the contract documents was shorthand or a scrivener's error and that Pacific Century Development and Realty, Inc. was understood by all the parties to the contract to be the real party in interest and therefore is entitled to relief.

Foreign corporations, as a precondition to the conduct of business in the Commonwealth, are required to obtain a certificate of authority from the SCC. Should the real name of the foreign corporation be unavailable, "...the foreign corporation may use a designated name that is available if it informs the Commission of the designated name." Va. Code Ann. § 13.1-762(B)(2).

Effective May 6, 2005, the SCC authorized Pacific Century and Development and Realty, Inc., a Hawaii corporation, to transact business in Virginia as Pacific Century Development and Realty of Hawaii, Inc. Having complied with the applicable provisions of law pertaining to foreign corporations, Pacific Century Development and Realty, Inc., a foreign corporation, is entitled to do business in the Commonwealth as Pacific Century Development and Realty of Hawaii, Inc. Va. Code Ann. § 13.1-309.1. The instant action is a suit for reformation, specific performance, and damages arising out of contract for the purchase of a tract of land and vineyard from the Defendants. It is alleged that Wheatland Farms, LLC and Neil Rackham are the owners of approximately 549 acres of real property, including a manor house and other out buildings. Portions of the property are leased for use as a vineyard and some of the buildings are leased as private residences. Special events on the property are coordinated through Special Events, Inc. t/a Encore Special Events.

On December 31, 2004, the Defendants executed a sales contract and addendum that provided, among other things, for the sale of the property. Additionally, they executed a further addendum to the contract that was rejected. A deposit was tendered and discussions were had regarding the execution of a further addendum to the contract. These discussions would lead to the execution of a third addendum to the contract replacing prior addenda and further modifying the sales agreement.

Salvatore J. Cangiano, the sole shareholder, officer, and director of Pacific Century Development and Realty, Inc., executed all of the contract documents on behalf of the Plaintiff. Although all of the contract documents refer to the purchaser as Pacific Century, Inc., a Hawaii corporation, it is asserted that all of the parties intended that Mr. Cangiano's company, the instant Plaintiff, was the purchaser. The reference to Pacific Century, Inc., an active Hawaii corporation having nothing to do with the transaction, was, Plaintiff contends, but an "identification error." Pacific Century, Inc. has previously appeared before this court in related litigation and been dismissed, at its request, from further involvement in this case.

Sometime after the execution of the contract and before the date set for closing, it is alleged that the Plaintiff, by Mr. Cangiano, entered into an agreement with Toll Virginia GP Corp. that the Plaintiff would be paid a fee of $5,000,000.00 upon the transfer of the purchase agreement or the property. The Plaintiff asserts that it has been at all times ready, willing, and able to perform its obligations under the purchase agreement, third addendum, as well as the execution of any further documentation necessary to and in conformity with the agreement. It is suggested that the Defendants' efforts to terminate the contract are motivated by a desire to sell the property at a higher price. Plaintiff points to the impact of the decision in Gas Mart Corp. v. Loudoun County Board of Supervisors, 269 Va. 334 (2005), and the effect of that decision on the zoning status of the property as a motivating factor in the Defendants desire to breach their contractual obligation to the Plaintiff.

As noted earlier, it is the contention of the Plaintiff, Pacific Century Development and Realty, Inc., that any reference to Pacific Century, Inc, a Hawaii corporation, in the contract documents are but shorthand or "scrivener's errors" and that the parties understanding at the time of contracting was that the property would be sold to a Hawaii corporation owned and controlled by Mr. Cangiano, that is, the Plaintiff, Pacific Century Development and Realty, Inc. The Court has previously addressed the matter of whether the issue of the instant Plaintiff's standing to pursue the instant cause is capable of resolution on demurrer.

The Plaintiff, Pacific Century Development and Realty, Inc. is a Hawaii corporation. Mr. Cangiano, as sole owner of the corporation, was entitled to execute the contract documents on its behalf. Pacific Century Development and Realty, Inc. was thwarted in its effort to obtain a certificate to transact business in the Commonwealth in its own name by the actions of the Defendants. Accordingly, it has elected to use a designated name, Pacific Century Development and Realty of Hawaii, Inc., and has so informed the Commission. Having complied with the applicable provisions of law, including the proper designation of a name available to it, the Plaintiff is entitled to do business in the Commonwealth. Both the name under which it has been incorporated in Hawaii as well as the designate name by which it is authorized to conduct business in the Commonwealth is on file with the SCC. It has not assumed a "fictitious name" for which further registration with the Clerk of this Court is required under Va. Code Ann. § 59.1-69.

The fact that the Plaintiff has complied with the applicable registration requirements necessary to the conduct of business only permits the instant Plaintiff the opportunity to pursue discovery in this case. As pled, the Plaintiff asserts that the use of the name of another corporate entity in the contract documents was shorthand or a "scrivener's error." To the extent it relies not upon the name contained in the contract documents but upon the intent of the parties that failed to find expression in those documents through the use of shorthand or a "scrivener's error", the Plaintiff cannot upon such a theory be said to have purposefully conducted business using the name, Pacific Century, Inc.

Accordingly, the Court will grant the motion to compel, in so far as the objection raised by the Defendants relates to the application of Va. Code Ann. § 59.1-69. However, the Court limits its ruling to the singular objection relating to any requirement that the Plaintiff be required to file a fictitious name certificate with the Clerk of this Court as a precondition to the conduct of discovery. It makes no finding with respect to the merits of the contention of the Plaintiff that Pacific Century Development and Realty, Inc. is entitled as a matter of fact or of law to recovery. Culpeper Agricultural & Mfg. Soc'y v. Digges , 27 Va. (6 Rand) 165 (1828); Lataif v. Commercial Indus. Constr., Inc., 223 Va. 59 (1982); Westgate at Williamsburg Condo. Ass'n v. Philip Richardson Co., 270 Va. 566 (2005).

Mr. Walk may draw an Order consistent with this opinion, to which counsel may note their exception.

Very truly yours,

Thomas D. Horne, Judge